GBP/JPY surges to 195 as yen weakens further
The positive developments in US and China talks has led to improved market sentiment, weighing on traditional safe havens like the yen
GBP/JPY extended its upward momentum during Monday’s European session, breaking above the 195 mark for the first time in weeks. The pair has staged an impressive rebound over the past five trading days, recovering from last week’s dip to 190. It now faces near-term resistance between 195.50 and 195.95
GBP/JPY daily chart
Past performance is not a reliable indicator of future results.
Yen Under Pressure Amid Improved Risk Sentiment
The rally in GBP/JPY is largely being driven by renewed weakness in the Japanese yen. Positive developments in U.S.–China trade talks have lifted global market sentiment, improving the outlook for economic growth and prompting investors to rotate out of traditional safe havens like gold and the yen.
Meanwhile, Japanese Prime Minister Shigeru Ishiba reiterated that Japan will not agree to any initial trade deal with the United States unless it includes provisions on automobiles. He also urged Washington to remove the 25% tariff on Japanese vehicles, reinforcing Japan’s firm stance in trade negotiations.
BoJ Cautious as Inflation Risks Grow
The Bank of Japan continues to tread carefully amid global economic uncertainty, particularly concerns that U.S. tariffs could weigh heavily on Japan’s export-driven economy. Despite this caution, domestic data suggests that inflationary pressures are becoming more entrenched. If the BoJ remains reluctant to raise rates in the face of persistent price growth, it risks slipping into a stagflation scenario.
BoE Cuts Rates, Pound Shrugs Off Dovish Move
On the other side of the pair, the Bank of England delivered a widely anticipated 25 basis point rate cut last week. While rate cuts typically weigh on a currency, the pound strengthened in response, as many investors believed the move was overdue. Like its global counterparts, the BoE offered limited forward guidance, opting for a cautious tone amid ongoing uncertainty around U.S. trade policy. With the current tariff pause set to expire on July 8, central banks remain hesitant to commit to a clear policy path until greater clarity emerges.